BORDEAUX, France (Reuters) - A far-right candidate beat France's ruling Socialist party on Sunday to a place in a by-election run-off vote, reducing the government's slim parliamentary majority and highlighting the rise of the National Front.

The seat, vacated by former budget minister Jerome Cahuzac, who resigned after admitting to holding a previously undeclared Swiss bank account, will now be contested by the National Front and the main conservative opposition UMP party, after the Socialist candidate received only 23.69 percent of the vote.

The UMP's Jean-Louis Costes came first in Sunday's first round with 28.71 percent, followed by the National Front's Etienne Bousquet-Cassagne with 26.04 percent.

Turnout in the village of Villeneuve-sur-Lot, 130 km (80 miles) southeast of Bordeaux, was just 46 percent, down from 57.7 percent in 2012.

The Socialist party, which rules in a coalition with the Greens, has an outright majority in France's lower chamber, but that majority will now be down to three.

(Reporting by Claude Canellas; Writing by Michel Rose; Editing by Robin Pomeroy)